The US capital markets had a mixed week this week, with the Dow Jones Industrial Average posting a weekly gain of +1.6% but the Nasdaq posting a weekly loss of -1.1%. The S&P 500 was up +0.6%, but the Russell 2000 was down -2.0%.
The week was highlighted by earnings calls, which generally cause some individual companies to deviate from their respective sectors and peers - it is a chance for active investment managers to outperform passive index investors, if they picked the right companies. The Nasdaq struggles were led by tech giants Facebook and Twitter, both of which have been choosing privacy rights over strictly business interest and who are now starting to feel the heat. Facebook's one day drop this week was the largest drop in terms of market cap in market history, as it shed 20% of its value in one day on slowing growth forecasts and tightening margins. Twitter is cracking down on accounts and has felt the pinch of declining growth as well, sending investors scrambling.
In economic news, 2nd quarter 2018 GDP numbers came in at +4.1%, which is the strongest in 4 years, while inflation slowed down to a pace of 1.8%, annually. Home sales slowed as prices are high and interest rates have risen, but inventory is still low so a housing price crash does not seem imminent. The trade deficit narrowed again in June as well, as imports were reduced and exports rose, both of which were likely helped by an increased scrutiny and tough trade talk coming from Washington DC.
In terms of sector performance, energy did well, posting a +2.3% gain for the week, while IT (facebook/twitter) lagged at -1.2% for the week. Oil was up +1.0% for the week, while gold and silver were down -0.5% and -0.1%, respectively (gold at $1,223 per ounce and silver at $15.50 an ounce).
Cryptocurrencies had a mostly good week. Bitcoin was up +10.0% currently at $8,240. Steem was flat and is currently at $1.46 and EOS was up +2.0%, currently at $8.32.
Overall, the US capital markets remain strong and I remain cautiously optimistic about the rest of the year.
Thanks for stopping by,
Brian